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Article Summary

Qui Tam 2019 is the second annual conference of the Federal Bar Association's Qui Tam Section, for which TELG's Scott Oswald serves as chair. The two-day event will tackle some of the hottest topics in False Claims Act litigation, with panels featuring attorneys from both sides of the aisle, along with government prosecutors, agency representatives, and subject-matter experts.

Here Scott and Andrew Miller of Baron & Budd preview a Day Two panel that will consider how to handle situations where an FCA defendant wants to settle — but has limited funds with which to do so.

This video interview by TELG managing principal R. Scott Oswald was published by The Employment Law Group, P.C. on January 11, 2019.

Qui Tam 2019 Panel Preview: Ability to Pay

R. Scott Oswald: [Addressing camera] Scott Oswald here. I’m the chair of the Qui Tam Section of the Federal Bar Association. We are going to have our annual conference this year on February 28 and March 1, 2019. We are privileged to have with us Andrew Miller, who is a shareholder at Baron & Budd here in Washington.

Andrew, your panel for the annual conference is on ability to pay. Give us a sense of what folks can expect when they attend that panel.

Andrew M. Miller: Sure, happy to — and thanks for having me.

Ability to pay, I guess as it’s known in the industry, is probably better referred to as inability to pay — meaning that ultimately, when a defendant is found to have liability under the False Claims Act and the government has assigned a monetary value to those damages, that the defendant doesn’t have the financial wherewithal to actually pay that bill as demanded.

So what’s interesting about this is, this is something that comes up in a lot of cases and we’re seeing it more and more. Even if you’ve had experience in your own practice with these issues, I think the dynamic panel that we’ve put together — federal prosecutors, financial analysts within [the Department of Justice], as well as perspective from the qui tam bar and the defense bar — I think you’re going to learn something new.

And if you’ve never had to deal with it, and you’ve only heard about it in passing, this is an opportunity to get a full education about what the issues are.

Oswald: So, based on what you’re saying, it sounds like we’re going to actually get a sense of what the government considers when a defendant comes forward and says “Look, I don’t have the ability to pay.” Is that right?

Miller: That is right. And so we’re going to be — we’re very privileged to have [as a panelist] Eileen Zimmer, who works as a senior financial analyst at DOJ. She and her team do this [ability-to-pay] analysis, if and when that issue arises in a case.

Oswald: You said this is happening more and more. Why do you think that is?

Miller: You know, I don’t know if I have an answer to that. But I think it’s important for attorneys on both sides to really understand the issues, so that they can navigate their clients through the process. I think DOJ is getting better and better at this analysis as well. All together, the parties can better understand the issues and better represent their clients in these circumstances.

Oswald: When one of these issues comes up with you — and you mostly represent relators in these matters — what’s that conversation like with your client when there’s an amount being discussed as a resolution and then this issue of [in]ability to pay comes up. What’s that like?

Miller: It’s dispiriting, I’ll say that.

Typically our clients have come forward with inside information and they believe [that] fraud has occurred. When they get validation … but then the defendant isn’t able to pay what the government thinks they owe, there’s a level of frustration — and that is shared by their counsel as well. But that’s just the reality of the situation.

What we what we do is, we guide our clients through the process. Ultimately whatever the settlement amount is, it has to be fair, adequate, and reasonable: The False Claims Act provides for that assurance. And so, whether we hire our own financial experts to analyze the financial information provided by the defendants to the government, or by other means, we have to go through the process to assure our clients that the amount that’s being offered is in fact fair, adequate, and reasonable

Oswald: Got it. And my guess is, for defense counsel, it’s probably equally difficult to have that conversation. When you talk to defense counsel about what they go through in those situations, give us a sense of what that conversation is like with their clients.

Miller: Sure. We’re aware that some counsel and some defendants look at the ability-to-pay issue as a discount program — which it is, in fact, not. It’s not just an ability to pay less than what you owe. It is a very thorough process where you have to open up your financial books to DOJ to have a full accounting of your distressed situation if that exists.

What’s also interesting, from the defense perspective, is that once you get into the ability-to-pay analysis, you basically are no longer having discussions about liability. Liability has been established, so there is no further negotiation on that point. It’s purely a financial calculation.

Oswald: So really, it’s about how much the defendant is going to pay, not whether they’re going to pay.

Miller: Correct.

Oswald: Got it. How often does it come up in situations where there might be some sort of criminal aspect as well? I know that there’s some differentiation the Department of Justice makes in terms of what [portion of a civil/criminal settlement] is available for a relator’s share. Is that ever a factor in these kinds of cases?

Miller: It’s my understanding that DOJ keeps those things separate, but I think that that’s a great question — and I’m glad that we have two folks from the Department of Justice who will be on the panel. It will be interesting to see how, when you’ve got those parallel investigations and potential liability both on the civil and criminal side, how an ability-to-pay calculus plays out.

Oswald: Andrew, tell us a little about you personally. When you’re not lawyering at Baron & Budd, where do you spend your time?

Miller: When I’m not working I spend most of my time chasing around my two very young daughters. My wife and I really enjoy — the girls are only five and two, so we jump in with both feet, chase them around. All their activities — I’ve never known so much about ballet and gymnastics, and they’re becoming little fish in the swimming pool as well. Anything that we can do to help them out in all their areas of interest, which is officially everything under the sun right now.

Oswald: Andrew, thank you!

Miller: Thank you, Scott.

Oswald: You’re welcome. [Addressing camera] And we look forward to seeing everybody on February 28 and March 1, 2019. You can sign up at the Federal Bar Web site at www.fedbar.org.